§ Mr. Giles Radice (Durham, North)I beg to move amendment No. 138, in page 5, line 3, at beginning insert 'Subject to sub-section 11 below,'.
Mr. Deputy SpeakerWith this it will be convenient to Lake the following amendments: No. 139, in page 6, line 8, at end add—
(11) no licence to supply electricity shall be extended by virtue of subsection 2(b) above, to cover an area without consultation with the consumers' committee for that area.'.
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No. 165, in clause 7, page 6, line 17, at end insert—
'(c) conditions requiring any contract between a public
electricity supplier and a person authorised to generate electricity which is of more than ten years duration to be referred to the Director prior to the contract being agreed.'.
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No. 175, in clause 9, page 7, line 36, at end insert—
'(2A) A licence under section 6(1) above shall provide that Schedule 3 to this Act shall not have effect in relation to a license holder if—
(2B) Where objections are lodged under (2A) above the licence holder may appeal to the Director General, who shall take into consideration the measures taken by the licence holder to expand capacity by means other than the building or expansion of plant.'.
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No. 176, in page 8, line 18 at end insert—
'(6) Nothing in this section or in the schedules mentioned in this section relating to compulsory purchase shall affect the holding or outcome of a planning inquiry into an application to contruct or expand buildings or installations for the purpose of the generation, transmission or supply of electricity.'.
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No. 179, in schedule 3, page 72, line 5 at end insert—
'(2A) Such consent may be given:
(3) Any question whether such consent is or is not unreasonably withheld shall be referred to and determined by the Secretary of State.'
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No. 129, in clause 10, page 8, line 21 after second 'licence', insert
'and the consumers committee appropriate to that area.'.
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No. 140, in clause 11, page 9, line 10 at end add—
(c) notwithstanding subsection (i) above the Director must refer to the Monopolies and Mergers commission any modification he proposes to the conditions of a licence, where the holder of one licence under Clause 6(1)(c) above is proposing to acquire another licence holder under that section.'.
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No. 141, in page 9, line 10 at end insert—
(d) notwithstanding subsection (i) above the Director must refer to the Monopolies and Mergers commission any modification he proposes to the conditions of a licence, where the holder of a licence is proposed to be acquired by another person.'.
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No. 143, in page 9, line 23 at end add—
'any observations of the consumers' committee for that area on the reference with regard to subsections (1) and (2) above.'.
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No. 142, in page 10, line 3 at end add—
'(c) any observations of the consumers' committee for that area on the reference with regard to subsections (1) (2) and (3) above.'.
§ Mr. RadiceThe amendments concern the licensing arrangements and contracts which I believe go to the heart of the Bill. The Secretary of State has said that electricity privatisation, unlike other privatisations, creates and enhances competition and produces what is called downward pressure on prices. The problem, of course, for the Secretary of State is that he must create the conditions in which he can successfully sell the industry to private investors and ensure certainty of supply. In the end what the Government have come up with is what is being called the big fix arrangement—[Interruption.] The Secretary of State appears surprised at the phrase "big fix". I should have thought that he had become very familiar with it, as he invented it.
The big fix regime is a licensing system in which—I quote not from a Labour party document but from a very good publication—
the interests of the privatised companies are balanced out and protected as far as possible; where new entrants will, initially at least, find it difficult to enter the market, and where prices are very strongly regulated.In Committee we had one of the fiercest, the most heated and, I believe, the most revealing debates over licensing and the issue of contracts. My hon. Friend the Member for Sedgefield (Mr. Blair) made one of his most able speeches and demonstrated that the licensing and contract proposals were extremely complicated. One hon. Member had to ask for a blackboard to try to assist other hon. Members to understand the proposals. The Minister also had trouble understanding them.
§ Mr. CryerMy hon. Friend says that the Minister also had some trouble. Is he aware that the Minister is not listening to his argument, but is busy consulting the advisers in a great conference in the corner of the Chamber? Presumably he is trying to get some information to answer the debate, but surely it would be better if he listened to my hon. Friend.
§ Mr. RadiceThe Minister had such problems throughout the Committee, that he was almost always consulting non-existent advisers while Opposition Members were speaking—that is par for the course.
The licensing arrangements and contracts were specifically designed in the case of electricity supply to rule out competition at the initial stage and to introduce, at best, a limited form of competition only in the future.
450 My hon. Friend the Member for Sedgefield also forced the Government to reveal the existence of the "contract working party", which has been established to arrange the big fix. In the so-called initial contracts for existing capacity, which could last for up to 10 years, the big fix ensures that there is no significant competition because the yardsticks do not apply.
In Committee the Government admitted that, in respect of contracts for future capacity, those contracts will be allowed to have take-or-pay clauses. It is unlikely that companies will enter the industry unless such clauses exist. If it is correct that the yardsticks will not apply in the contracts for existing capacity and that contracts for future capacity will contain take-or-pay clauses, it is extremely hard for the Government then to argue that those contracts will promote meaningful competition in the day-to-day operations of the industry.
Our amendment is designed to make the best of a bad job. It would ensure that all long-term contracts come under the specific supervision of the director general. Under our amendment he would be able to call in all long-term contracts prior to their agreement.
The amendment is sensible and constructive and a Government who were serious about competition would accept it. I suspect that, despite all the claims by the Secretary of State and the Minister about competition, the Government are more interested in ensuring the successful sale of a public industry. If they reject the amendment it will confirm our case, made so ably by my hon. Friends in Committee, that the Government believe not in competition or in helping the consumer, but only in privatisation, irrespective of the merits of the case.
§ Mr. BeithI wish to speak to amendments Nos. 175 and 176, although, at this time of night, it would be more honest to say that it has fallen to me to speak to amendments Nos. 175 and 176.
Amendment No. 175 relates to the compulsory purchase powers in the Bill. They have caused a great deal of anxiety to many people, some of whom have, in the past, voted for the Conservative party. They are a little puzzled about why the party which they have long supported has granted such draconian—they would consider them Socialist—compulsory purchase powers to private companies. The amendment would change the procedure so that, in certain circumstances, it would be the director general's duty, if appealed to, to decide the matter and to take into consideration the alternatives that were available to the company concerned to expand capacity in some other way instead of building the proposed plant or expanding an existing one.
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Two sets of circumstances are envisaged. The first involves the owner of land affected by compulsory purchase whose livelihood would be affected. I quote the National Farmers Union:
The NFU is opposed in principle to the granting of compulsory purchase powers to private companies. We believe that where PLCs need to acquire rights in land, or land itself, they should pay the open-market rate for those interests. That should include any development value …At the very least, the PLCs should have to seek the consent of the owners and occupiers of the land which they wish to acquire.The NFU is concerned about occupiers whose livelihood will be at stake if land is taken away. It may be the crucial acreage without which a farm ceases to be viable. If that acreage is to be taken away because an 451 electricity supply company insists on building a power station when other alternatives are open to it, it is surely right that those alternatives should be examined. A power station project should not be presented at a compulsory purchase inquiry as inevitable and necessary, and as something which by its nature justifies the exercise of compulsory purchase powers. The director general will have the means, the experience and the qualifications to assess whether it might be open to the company to expand its capacity in another way.The same procedure is envisaged in the amendment where there are public objections on the ground that the natural environment or wildlife would be damaged. Again, one can imagine a compulsory purchase inquiry where the objectors come along to point out that some unique wildlife habitat or noteworthy and well-appreciated environmental feature will be destroyed, but the supply company says, "We have to have this power station. It must he built. We have no alternative." In those circumstances, it is surely reasonable that instead of the inspector dealing with the matter at a compulsory purchase inquiry the director general, who will be qualified in those matters, should be able to consider whether the company could not carry out the expansion it required by some means other than the building of the plant in that particular place.
Amendment No. 176 also seeks to secure the rights available to objectors at planning inquiries in cases where compulsory purchase is involved.
The burden of both amendments is to protect the environment, wildlife and those whose livelihood may be affected by the exercise of draconian compulsory purchase powers by private companies which may not have sufficient regard to the alternatives open to them.
§ Mr. Michael SpicerIt falls to me to have to answer the hon. Member for Berwick-upon-Tweed (Mr. Beith) and, of course, the hon. Member for Durham, North (Mr. Radice). I shall deal first with the rather technical amendments referred to by the hon. Member for Berwick-upon-Tweed. We do not believe that those amendments are necessary, although we understand the hon. Gentleman's concern.
On amendment No. 176, where a proposed project requires the Secretary of State's consent under clauses 33 and 34, and is subject to public inquiry, the practice is for any related applications for compulsory purchase orders —the hon. Gentleman's worry—to be considered together with the planning application. In fact, the inspector will generally be asked to advise the Secretary of State on both matters. So there is no question of an application for a compulsory purchase order being allowed to affect the holding or the outcome of the inquiry.
We also think that amendment No. 175 is unnecessary because the compulsory purchase provisions of schedule 3 would apply only where the licensee wished to purchase land for licence-related activities, that is, activities directly related to the generation, transmission or supply of electricity. Under the Acquisition of Land Act 1981 a public inquiry has to be held if the owner-occupier of the land objects. The hon. Gentleman has fairly raised these matters, but they are covered under present legislation.
§ Mr. BeithIs the Minister satisfied that, at such an inquiry, it would be open to the objector to argue that other options are available to the company, rather than building that particular plant in that place?
§ Mr. SpicerThe objector has rights to make whatever cases he wishes, and at the inquiry it will be up to the inspector to determine the terms of reference and the conditions. The objector's rights will be accommodated within the normal terms of an inquiry. Therefore, there is no problem for the hon. Member for Berwick-upon-Tweed to be concerned about.
I imagine that the hon. Member for Durham, North was speaking to amendment No. 165, which we do not want to accept because contractual procedures are fundamental to the new structure that we are introducing in the Bill. Contracts should be freely entered into with the least possible interference. The regulator will have powers over the price formula, but we do not wish to interfere with contractual arrangements after they have been set up.
§ Amendment negatived.